It appears to me Ford Motor Company (FMC) led a charmed life through November 1905. FMC paid out $200,000 in dividends for the FY that ended September 31 1905 (the original investment by investors was about $30,000, if memory serves, in 1903, not a bad return on investment).
Ford was preparing to put Models K and N on the market in FY 1906, and I suspect all was well with investors and Henry Ford.
Then, this happened, triggering the following series of event s (these are my perceptions, and of course they may, or may not be accurate):
December 4, 1905:
This isn't a "rumor", the article says the factory is half completed, spaces are reserved for upcoming car shows, and this new competitor is off and running. I imagine quite a surprise for Ford investors.
FMC reaction. The board of directors hold a meeting and agree to send a letter to Mr. Malcomson:
The letter: "Alex Y.Malcomson be requested to tender his resignation as Treasurer and Director ....... to the President (John Gray, his uncle)....within five days".
Now, it gets even better.........
On December 22, 1905, the board holds the monthly meeting. In attendance are Henry Ford, John Gray, John Dodge, Horace Rackham, James Couzens, and........
Alex Y. Malcomson.
The minutes from the last meeting are read (the meeting in which the resolution requesting Malcomson's immediate resignation is approved).
The meeting continues (from minutes), and Malcomson makes a motion to give all employees a $10 Christmas bonus. Then, the letter he wrote December 15th in response to the request for his resignation is read and placed in the minutes.
I would think this meeting was at best, AWKWARD:
I hope anyone reading this is enjoying it. I believe this would have been quite dramatic at the time. Several board members and investors had long time ties to A. Y. Malcomson, however, their investment (Ford Motor Company) was making tremendous returns. (In 1905 alone dividends were $200,000)
All board minute copies from The Henry Ford, Acc 512, Box 4, Folder 1-7
To be continued...................
Malcomson was no fool and had to know this was going to come about. Wonder what his actual motives were? Did the Aerocar actually come about or was it all flash & rumors.
Oh yes, it came about, in surprisingly short order.
Don't get ahead of the story.
OK, had to do a few "work" related things. Now back to fun stuff......
Alex Malcomson's response to the boards request he step down. This two and a half page letter is read to the board at this meeting on December 22, 1905. The beginning and ending portions of the letter:
A. Y. Malcomson acknowledges receipt of the letter, and says he will not step down, due to having more than one quarter interest in the business, and (paraphrasing) because he has helped so much in building the business.
For some reason I doubt all the board members went out for beers together after this meeting.
December 28, 1905: Adding "insult to injury", these two advertisements appear on pages 90 and 91 of "The Automobile", a national magazine.
More to follow...........
Sounds like a TV soap opera.
This must have been fun for Joe Galamb to see all of this as he started at Ford on December 11, 1905 after leaving Harris Press on Niles, Ohio.
Meanwhile, Ford Manufacturing Company is incorporated. This process appears to have began in late November 1905, and is announced in the papers in late November and December 1905:
January 9th, 1906:
The board of directors agrees to a contract with Ford Manufacturing and Dodge Brothers to build chassis for each car.
February, 1906L announcement of the location of Ford Manufacturing Company:
Meanwhile, both Ford and Aerocar advertise and attend the major car shows:
That last article looks like the inside of your garage.
Keep this post going.
It kind of does
This is great information Rob!
I really enjoy these posts.
10,000 Model N chassis ordered from Ford Manufacturing at $206.00 each = $2,060,000.00, the profits being divided among the shareholders (except Malcomson).
Ford sold all of these by the end of 1907 (some became Model R or S).
1000 Model K chassis ordered from Dodge Brothers at $437.50 each = $437,000.00 the profits going entirely to Dodge Brothers.
Ford had not sold all of these by the end of 1908, and in fact did not sell 1000 Model K's in all sales over all years.
Great information Rob!
If Royce is correct and Ford did not sell all of the Model K's they produced, then there should still be some for sale. I wonder what dealer is holding out. Probably one in Texas. Maybe Tony Romo has his eye on one. He can't play football, so might as well go car shopping.
Ford contracted for, and as far as we know, produced over 950 Model K (car 952 still exists, sales and production records show over 940 produced and sold), just under 7000 Model N, about 5700 Model S (road and runabout), and about 2500 Model R.
As we now know, Model K was the sales/revenue leader, and followed closely behind Models R and N in 1907. Of course we've been through this time after time before.
Ford financial records show the Model K, like most of the pre Model T Fords, were huge "winners" for Ford in the marketplace.
Lets imagine that Dodge Brothers was profitable, say 30% after expenses on the Model K order. 30% is a normal profit goal for a large corporation.
That would be:
.3 X 437,000 = $131,000.00 profit for Dodge Brothers.
Now let's imagine Ford Manufacturing was half as profitable, say 15% profit on the 10,000 car Model N order.
That would be .15 X 2,060,000 = $309,000.00
All of this profit would of course find its way to the shareholders of Ford Manufacturing, who after Malcomson's departure were the same guys who owned Ford Moor Company. And all that profit from the first ten thousand Model N / R cars was made in far less time than it took to sell all the Model K's.
Of course there were, as Rob points out, even more Model NRS produced after that ten thousand car order because it made sense to continue building a product that had a quick return on investment.
There were no more Model K orders, because of the slow return on investment and low sales volume.
There were no more Model K orders, just as there were no more Model A, C, B and F orders. All models ran their course. While Models R and S used the same chassis, they provided a very different financial outcome, and also "ran their course". While it's convenient to group NRS together for your purposes, they were different cars, with different profit margins. That's why they had different letter designations.
Ford ordered chassis for Models A, B, C and F. In each case, they produced the number of cars for the chassis they ordered (Ford minutes). In a some cases, such as with Model F, records indicate about 1780 were made/sold (memory) while 2000 chassis were initially ordered. Ford Model B, 500 chassis ordered, and we know car number 458 was sold.
Regardless, Model K was successful, as it's predecessors. In fact, the numbers prove it was one of the most successful of the pre Model Ts. However, due to where Ford Motor Company was going, and the legacy Henry Ford chose for himself and Ford Motor Company, history has mislabeled the Model K.
That's my opinion, backed up by facts I've provided over the course of the last year.
As for profit of parts and component suppliers, each had their own profit margin. I have know idea (and you don't either) what those were. Henry Ford, James Couzens and those responsible for purchasing negotiated those contracts, and they "were what the were". The body, radiators, differential, engine crankcases, cylinder jugs, wheels, tires, and almost every other part of these cars were made by outside suppliers.
I intend to show what I've found, that the Model K was in fact a quality car, designed and promoted by Henry Ford, and that it deserves it's rightful place as one of the many successes that helped Ford Motor Company position itself for the development and production of the Model T.
Ford Manufacturing Company is another matter entirely, and I may delve into that in a minute, because I have a starving daughter that I promised to take out for pizza........
Then, as now, replacement parts were marked up hugely. For example, the Model T crankcase; in 1914 the cost to make one was calculated by Lucien Arnold to be $2.26-1/4. Retail was $12.00; about a 540% markup.
I can only imagine James Couzens, Hawkins (auditor at the time) and others saw the numbers for repair/parts and "sundries" (accessories) and the huge potential windfall coming their way as more and more Fords were sold.
Unlike most car companies that were producing less than 1,000 cars per year, the growth potential from the sale of parts had to look huge (imagine where the graph on a trend like this is going, straight up).
The numbers below are taken from the "Gain" (profit) column of Ford Audit records, 1906 - 1908. The numbers do not include the few Model Ts sold in FY 1908, nor the carry over sales of Models C, B and F in 1906 and 1907.
I love the discussions on the merits of the Model K, and all the pre-T models. But the bottom line remains that "We take less profit on each car, but make more cars, give more employment of labour, and in the end we get all the profit we ought to make" (Henry Ford, 1916).
wow! The information on the significance of the Aerocar, Malcomson, and Ford is great stuff. This needs to be made into a movie. Are there any known Aerocars in existance today?
There is a freshly restored Aerocar "down under." One of the forum members put up pics of it not long ago. Maybe a search will find it.
Also, here's a teaser for your movie. A. Y. Malcomson and Frank Kulick each place at a race in September 1904, driving Fords. Barney Oldfield among others are also racing:
Every good movie has to have a babe... here's how she might just fit in
Wow, do you have any more information on "Miss Leah Russell"?
In the movie, who rides into the sunset (on 999, or the six cylinder racer) with Miss Russell? Kulick? Malcomson? Oldfield?
(or does that rascal HF sneak into the picture)
No Rob I don't. A chance find. Depending upon her personal attributes, I may volunteer to ride off into the sunset with her. Michelle may chase us with her six shooter though (but more likely Michelle may enjoy the new-found freedom!!).
Well, this was a fun thread......then Royce spoke up.
Eric, still a good thread
John Stokes, your about to be in big trouble.
May I present.......Miss Leah Russell:
Miss Russel was a well known actress and comedienne.
She also rode the most famous Ford of the time:
Another news clip. Even from a weathered copy of newspaper, Miss Russell is a beauty who transcends time...
In my opinion.
As long as our wives don't read this, right John?
When's the sunset?
A friend of mine thinks a barn find Aerocar would not be worth much since few people are aware of it's existence. I argued that it should be worth a small fortune since there are none around and because of it's historical significance to Ford. I'm curious what some of the informed on this forum think about this. I'm trying to win a gentleman's bet :-)
I was at the auction when this Aerocar sold several years ago. Unfortunately, I didn't know about Aerocar's relationship to Ford. I was vaguely aware of Malcomson, but only that he was some "boogy man" who forced Henry Ford to build cars he didn't want to.
This particular Aerocar was in poor original condition (mostly there, but too much fo a job for a "ham and egger" hobbyist like me). I don't recall what it brought, but I doubt much (relative to it's rarity).
I suspect that "orphans" don't bring excessive amounts, unless they have some claim to fame (well known, top end, or someone famous drove or built) that preserved some "identity" for a hobbyist. For example, I didn't attened the auction this car was on for the (going from memory) Mason, Aerocar, Regal, Locomobile, Kissel Kar (2) or Cleveland s on the the sale, I was there to watch a 1913 Model T chassis sell.
I not implying the Loco and Regal weren't/aren't sought after, however some of the other marquees just don't carry the name recognition, so I wonder if they command the price their rarity suggests they should?
Below is a "cheat sheet" (March 1906 newspaper new car guide). Look at the "obscure" brand s in the middle of the pack ($1500 t0 $2200). I wonder if they would command as much as a Buick, Oldsmobile, or Cadillac in the same price range. Although they are much more "rare", I suspect they wouldn't.
I sure would like to see each of these brands in person......
It looks like I lose this bet ;-)
Alan, it depends on where you set the difference between "not a lot" and "a small fortune"
I would say any barn find brass era auto with everything there would be worth a lot more than any 20's Ford and what I would consider a small fortune. More well known brass cars may be worth even more, but the Aerocar would still cash in a lot since it was a luxury brass car - look at the asking prices of high end orphan brass cars at the HCCA classifieds: http://www.hcca.org/classifieds.php?cars
And the key to value would be "Everything there" since getting spare parts would be impossible and reproduction of parts very hard with almost none other cars to look at.
Maybe the problem with Autocar was the cooling - Chevy did that blunder in 1923, letting copper/air cooled cars out to the public without proper testing - they didn't hold up in use so they were recalled.
Sorry "Aerocar", not Autocar - must be getting sleepy, 0108 AM here.. Let's call it a night
Franklin was successful with aircooled cars from 1902-34, and then the engineers picked up the pieces and made modular aircooled engines for cars and aircraft. Preston Tucker bought that co to power his cars, and took it into bankruptcy. Last I knew, Pezetel, the Polish company was making Franklin aircraft engines.
Except for some boats, all engines are aircooled.
Sure air cooling works, if properly engineered.
To be sure it's properly engineered you have to test it thoroughly before selling to the public, that's what VW did in the late 30's and during the war - and they did indeed success when production eventually got speed. Franklin had great engineers - but tough luck during the depression and went bancrupt. Maybe their front styling was disliked by some? I think i've read that somewhere, but it's off topic in this thread.
Hang in there, Ralph Thinking of doing some travelling to see whatever you may have missed of the US and the World?
Maybe I should have kept quiet. As Roger said, any brass car is valuable (I think that's what you meant). I've had a few "not so common" cars, and they each brought good money (both when I bought them, and to a lesser extent, when I sold ).
The two most unique were probably an Oakland (not really an orphan, the predecessor of the lower level Pontiac) and Dort. Both brought about the same money as a Model T probably would have of the same vintage. However, considering they both cost more "in the day" and were exponentially more rare in comparison, that seems unusual (that they brought the same money).
I think the issues are, you can get parts for Model Ts, so they are more desirable from a repair and maintenance standpoint. Ts have more "aftermarket devices available, again easier to keep on the road. And, I think there is a much larger market (more people know about Model Ts, and so desire them) for Ts than orphans.
At the end of the day, I don't think there is a brass car I would turn down.
I appreciate all the feedback. The truth is, there was a gentleman's bet. But that is because I helped extract a 1908 Aerocar Model E from a hoarded barn like garage where it had been sleeping for 50 years. The car had a very light restoration in the 50's which was basically a wheel repair and some light engine tweaking. It was documented in a national magazine of the day. We have the issue. There is also a letter from Harrahs Car museum trying to convince the owner to sell it to them, assuring him it will be properly taken care of. The current owner wishes to remain anonymous. But here are some pics of the extraction. It was a blast.
I wish I could upload more pics but i keep getting an error message saying the file size is larger than 200 kb. Well, all my pics are between 575 and 850kb. I don't understand why the one posted. But that is all I can post since I do not know how to make my pics smaller in kilobyte size to meet the forum's picture size requirement. Too bad. I have great shots of the motor. :-(
Neat car. Mi've collected numerous Aerocar ads and a few news clippings due to the relationship to Ford. If your friend would like any, I can email several. Just PM me.
By 1908, Aerocar was a company in trouble financially. It seems to me like a "tale of two cities" when comparing Ford and Aeorocar. Aerocar began with a huge (for the day) $400,000 capitalization. A. Y. Malcomson was president, and he had just witnessed Ford Motor Company's rise, so one would have thought he would be an asset.
However, I've noticed, before the first car hit the ground, Aero had a state of the art factory (later to become the Hudson factory), national sales staff, and had advertising in national magazines and most of the major newspaper markets.
I suspect in addition to incurring immediate debt, their product was just another "also ran". Their first car was a 24 hp, nicely apportioned touring car. At the same time, Ford, Franklin, Stevens Duryea, National and a few others brought out high powered six cylinder cars. Several other carmakers introduced high powered cars for the same cost or not much more than the lower powered Aerocar at $2800.
For 1907 Aero brought out a roadster (similar to the one above), and added a 40 hp water cooled car. The 24 hp roadster and touring aircooled cars came down in price, while the 40 hp cost a little less than the 24 hp the year before at $2750.
By 1908, Aerocar had added another $100,000 capital, and lowered prices, selling their lower hp cars like the roadster and a light touring for $1500, and their "big" touring for only about $2200. The fact is, while many accuse Alexander Malcomson of demanding a big car (at Ford) Aerocar began with a mid priced, moderate powered car, and steadlily dropped their prices (I suppose out of necessity).
I have noticed Aeorcars did well in competitions, winning and placing in a few races. When they (Aero) announced a deal to equip their cars with shock absorbers in 1906, the article said they would order between 300 and 800 sets. Their stated goal was to build 500 cars in 1906, but I suspect they were closer to the 300 minimum shock order than 500 (cars sold).
Definitely a rare car, with an interesting parallel history to Ford.
Thank you for sharing,
Thanks Rob. That's very kind of you. We would love anything you have on the Aerocar. I wish I could figure out how to get passed the 200 kb file restriction. I would love to share some more pics. The engine is a thing of beauty. Since it is air cooled, it looks like 4 Indian motorcycle cylinder jugs. It is very cool!
Pun intended ;-)
Try ImageResizer by Mihov. It is free and easy to use. You need to select the new number of pixels until the resulting file size is under 195KB.
Irfanview also provides an easy way to resize images for use on the web. Here is an example using a Shorpy image:
My VW beetle and a bunch more did OK with air cooling!
Try this link - according to this the Aerocar factory became the Hudson factory:
Thanks Thomas. If I ever need to post pics again I will try that. But Rob here resized them, and started a new thread on the Aerocar with several pics I sent him. Here is the link to that thread if you would like to see them.
Desirability in any collectible, maybe especially antique cars, is a weird sort of a thing. Human beings are by nature, many things. Among them, social creatures. For this reason, they tend to want the REOs, Maxwells, and Buicks in spite of the fact that they are more common. They tend to want a (?) because they want to tour with their buddy that has one. They also like the security of knowing there may be parts, information, or help when they need it from a friend that has one. You may notice a tendency for makes, and even models, to cluster in parking lots on brass era and nickel age tours (probably other eras as well, but those are the tours I go on). I also, am guilty of that.
Another tendency in many humans is the desire to have something "better" than others have. Sometimes this means "rare" cars. More often, however, it means "notable" rare cars. Stutz, Packard and Pierce Arrow all fit into this category. These cars also can fit into the "my buddy has one" group. Truly rare, yet "notable" cars can be Hispano Suiza, Duryea, Locomobile and a couple dozen others. These cars can all be quite valuable.
Then, there are rare cars that are not particularly "notable". For some years, I had one of fourteen known surviving Jackson MI Fuller automobiles (a large two cylinder). When I bought it, I paid about half of what a two cylinder REO in similar condition would have sold for. When I sold it, I sold it for about half of what a two cylinder REO in similar condition would have sold for. This all in spite of the fact that my Fuller was larger than any two cylinder REO. My Fuller was known to be as fast and was as brassy as most two cylinder REOs, it was manufactured by the same people that built one of the best cars of that era (Jackson) and in every reasonable way measured up to a REO. But the owner of a Fuller will likely never go on a tour with his and another Fuller on it. I did not mind that. I would give almost anything to have it back, but alas, it is not to be.
As far as rare cars go, I used to have a Sayers touring car. Sayers and Scovill was well known for hearses and ambulances, hundreds of them still exist. What is not so well known is that for about five years, they tried to get into the passenger car market. They did not make many. The one I had may have been the only one left (I sold it to the Reynolds Museum thirty years ago). They don't get much more rare than that. If it had been a Stutz, I could have gotten at least ten times as much in the same condition.
Model Ts are of course the most common of pre1928 automobiles. They are fun, easy to maintain, find parts and information for, and you can share with lots of friends that have one. For these reasons, model Ts are very desirable. They maintain a good value, more so than most other cars of their eras. Even though the other cars are more "rare", good model Ts are often worth more.
Me? I like them all!
Drive carefully, and enjoy, W2
Thanks for your input Wayne. I guess until the movie comes out, this is just a cool rare car with interesting history...not a retirement plan.